Chinese property shares rise on lending spree for developers

HONG KONG Chinese property shares went up on Thursday after the country's biggest commercial banks agreed to provide at least $38 billion in fresh credit lines to cash-strapped developers, adding to recent regulatory support measures to revive their business.

The stock prices of China Vanke, Country Garden, China Overseas Land, China Resources Land, CIFI Holdings and Greentown China increased between 3.4 per cent and 11.1 per cent in Hong Kong.

The Hang Seng Mainland Property Index, a gauge tracking the sector, rose 5.3 per cent.

Four of China's biggest banks have agreed to provide fundraising support to property developers, including industry giants Vanke and Country Garden, in a coordinated effort to support the embattled property sector.

According to a note issued by Jefferies, Banks are trying to bolster the sector, but most of the new loans will go to state-backed developers, Shujin Chen, an analyst with Jefferies.

She said private developers that already defaulted on public debts will still struggle.

In the past few weeks, Beijing has increased measures to support the property sector, which has been hit by a debt crisis.

The sector has been reeling under mounting debts, defaults, slower sales and suspensions of construction, after the authorities launched a campaign to rein in excessive borrowing by developers.

Over the past year, several developers have defaulted on their offshore debt obligations, which has resulted in a sector-wide downturn that has weighed on the world's second-largest economy.

The central bank has issued a notice on Wednesday outlining 16 steps to support the sector in order to ease the crunch.

Sources with knowledge of the matter reported last week that local financial firms allow real estate companies to defer repayment of some loans, such as property development and trust loans.